Tesco hopes O2 venture will prove ‘every little helps’

4 Jun 2003

UK supermarket giant Tesco [TSCO.L] has announced that it is to launch its own branded wireless service in conjunction with mobile operator O2, turning up the heat in an already overcrowded UK market. The two companies today announced the creation of a 50:50 joint venture, Tesco Mobile, with the aim of having branded pre-paid phones on sale in stores and online in the run-up to Christmas and contract-based packages following soon after; the new service will use O2’s network. The UK market has one of the highest mobile penetration rates in the world with more than 80% of the population owning a phone. Nonetheless, Tesco is convinced it will be able to sign up around two million customers within the first five years and the two partners have committed GBP8 million in investment over the first two years. The move is a major departure for Tesco, which has been selling other companies’ pre-paid mobile phones in its stores for several years. However, the supermarket chain is keen to establish itself as a player in the competitive telecoms sector having already launched a fixed line service in partnership with Cable & Wireless in January this year. The new mobile service will give Tesco customers access to superstore-style offers and the opportunity to earn Clubcard points when buying handsets and airtime.

United Kingdom